What's behind Amazon's reported dive into the smartphone business?

Amazon Kindle Phone

An Amazon smartphone is in the news again. Amazon is already in the smartphone business, selling many manufacturers smartphones and most carriers’ plans through its marketplace. Its management knows that smartphones are a dog-eat-dog commodity business, and it is no secret that Samsung and Apple are the only profitable manufacturers in the smartphone business. Amazon must be planning a unique business model that necessitates its venture into this low- or no-margin business.

Amazon Kindle Phone

Credit: BGR

There is a hint of what Amazon’s reason for branding a smartphone might be in The Verge’s analysis of BGR’s reported images (above) and features of an Amazon smartphone. The Verge reported that the Amazon smartphone has glass on both sides. This brings a business model into focus that makes sense for Amazon’s content-centric business. Perhaps Amazon’s smartphone is like the Yotta smartphone (below) that has two screens, one LCD and the other an e-ink screen that would work perfectly as a Kindle e-reader that can be read in all light conditions, even on a beach. A deep read using an iPad or Nexus tablet can be satisfying, but they don’t compare to the low eyestrain, battery efficient e-ink readers.

Yotta Phone

Credit: Engadget

BGR also reported a mobile data plan called Prime Data that will accompany the Amazon phone announcement. Amazon Prime Data sounds like Amazon Prime. Amazon rewards its repeat customers with free shipping. Prime Data could similarly mean free content delivery to both screens. Buy a book, download it for free with an Amazon-sponsored data plan and read it on the e-ink side of the smartphone. Buy a movie and stream it for free to the LCD side of the smartphone with a sponsored data plan.

An Amazon Prime sponsored data plan for content delivery could accelerate sales to increasingly mobile consumers. By building the mobile data delivery costs of books and videos into the purchase price, Amazon relieves the consumer of the uncertainty of exceeding monthly data plan limits that send consumers scanning for alternative free Wi-Fi networks where ever possible.

Amazon won’t step into the smartphone brawl with Samsung, HTC, and LG with its proprietary Android and relatively limited app store unless it has a good business reason. Likewise, a consumer won’t buy an Amazon smartphone unless they believe they’ll get something more. Amazon Prime video and ebook content for consumers with big appetites could be a great reason for both Amazon to sell a smartphone and for consumers to buy it.

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